- REA welcomes VAT cut to 0% on Energy Saving Materials including solar panels, insulation and low carbon heating for the next five years;
- The change has been long called for by the REA;
- Government has also brought forward a planned business rates exemption for green technologies;
- REA says Government must introduce further measures to ease energy crisis.
The Association for Renewable Energy and Clean Technology (REA) have welcomed the Chancellor’s move to cut VAT to 0% on domestic energy-saving materials.
Rishi Sunak today announced homeowners having insulation, solar panels and other energy efficiency measures installed will pay 0% VAT for the next five years. The Chancellor suggested that a family having solar panels installed would see a saving of £1000.
These tax cuts have been called for by the REA for years, who include the change in their six point plan to tackle the energy crisis. The REA were also joined by nearly 30 companies and organisations across the energy industry in writing to the Chancellor in October last year, calling for the tax reduction on energy saving materials. That call was repeated last week.
On top of the VAT cut, the Chancellor has brought forward an exemption on business rates, making green technology, including solar panels and heat pumps, exempt from April 2022 – this is expected to be worth around £170m over the next five years to support the decarbonisation of buildings.
While welcoming today’s announced support for domestic renewables, the REA said the Government could still do more to ease the energy crisis, such as expand the range of technologies included as Energy Saving Materials, such as energy storage.
Amy MacConnachie, Director of External Affairs at the Association for Renewable Energy and Clean Technology (REA), said:
“The REA warmly welcomes today’s announcement to remove VAT on domestic renewables for five years. We have long campaigned for this change because we know these installations will help protect people from volatile gas prices and reduce their energy bills, while also supporting the transition to Net Zero and providing a catalyst for new jobs and investment across the country.
“The move to bring forward business rate exemptions for green technologies from April 2022, including solar panels and heat pumps, will help to further drive down costs and support the decarbonisation of buildings.
“We now want to see the Government clarify and go further on the range of technologies included as Energy Saving Materials, particularly energy storage, but this is a positive package of measures for our sector.
“We stand ready to deliver an energy future which is independent, secure, and stable.”
Last week, the REA led a coalition in urging the Government to:
- Move ‘green’ levies into general taxation – it is crucial that this is ring fenced at an equivalent value;
- Suspend VAT on energy bills – saving households £100 this year;
- Expand eligibility and increase value of Warm Homes Discount – ensuring additional support for nine million households as fuel poverty increases;
- Remove VAT on all domestic renewable and clean technology – reducing costs and helping households, landlords and local authorities move away from fossil fuels;
- Establish an effective home insulation scheme – ensure all houses to be EPC rating C at a minimum, where technically feasible, by 2024/25;
- Deliver an ambitious domestic heat decarbonisation policy – expand the Boiler Upgrade Scheme to cover the installation of millions of low carbon heating devices.
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Notes to editors
About the Association for Renewable Energy and Clean Technology (REA):
The Association for Renewable Energy and Clean Technology (known as the REA) is the UK’s largest trade association for renewable energy and clean technologies with around 550 members operating across heat, transport, power and the Circular Economy. The REA is a not-for-profit organisation representing fourteen sectors, ranging from biogas and renewable fuels to solar and electric vehicle charging. Membership ranges from major multinationals to sole traders.
For more information, visit: www.r-e-a.net